A new report from the Association for Financial Markets in Europe (AFME) and PwC has found that 95 per cent of survey respondents identified the opportunity for cost reduction as the most important driver for the adoption of technology, but only 28 per cent felt that their current investment allocated to this strategic change was sufficient.

Examining technology innovation in Europe’s capital markets, AFME conducted 20 interviews with Tech and Operations Division Committee representatives and a further 76 interviews from members of their banks, with PwC providing additional research.

This revealed that 90 per cent believed the impact of new technologies on the workforce will lead to business and IT skills merging and future roles becoming more relationship focused.

It suggested competition for future skills will be high, requiring banks to both invest in re-skilling the existing workforce and driving cultural change to attract new talent.

Technology is one of the most powerful levers banks have to address potential disruption, tackle existing industry challenges and to deliver future opportunities, according to AFME and PwC, which identified four core technologies: data and analytics, cloud computing, artificial intelligence (AI) and distributed ledger technology (DLT).

A clear data management strategy is an immediate priority as it is the enabler for the four core technologies identified. However, there are varying levels in the maturity of how data is currently being managed and the approaches to realise its future value.

“Significant implementation of DLT remains a longer-term priority based on the current complexity of bringing large-scale enterprise and industry solutions to market, as well as integration with legacy systems, and considerations for data privacy and cyber security,” the report read.

“Banks, policymakers and regulators must keep pace with new technologies to balance the potential risks and cyber security concerns they may introduce,” it continued, suggesting any future regulatory frameworks should be applied with a proportionate and principles-based approach, whilst ensuring a level-playing field that creates an open, competitive and sustainable market for innovation.

James Kemp, a managing director at AFME, said: “Policymakers and regulators have a key role to play in promoting innovation and supporting the adoption of new technologies, whilst ensuring that future regulatory frameworks maintain a level playing field and ensure financial stability.”

Isabelle Jenkins, partner at PwC, added that success will depend on the ability of investment banks to achieve long-term benefits from new technologies by prioritising investment, “looking to collaborate where possible, identifying and developing the skills needed, and building a culture for innovation”.

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